FC Nantes; Enforcement of Contractual Term – right or wrong?

On 19 January 2019, Cardiff City Football Club (“Cardiff”) broke its transfer record to sign Emiliano Sala for £15m from FC Nantes (“Nantes”). As with all transfers of players, the terms of the agreement were documented in a written contract between the parties with express terms dealing with, amongst other key issues, payment of the transfer fee.

The tragic events that have unfolded since this date are well-documented and have made headlines around the world. It sadly seems that the wreckage of the plane and a body has been found and salvage attempts have commenced. Mr Sala is tragically confirmed dead and the pilot’s body is still yet to be found.

Despite the above, if news reports are to be believed, Nantes has now demanded the first instalment of circa £5m in relation to the overall transfer fee for Mr Sala and have threatened legal action unless the first instalment is transferred to them within the next 10 days.

Is Nantes entitled to enforce the terms of the contract?

Whilst the specific terms of the contract are only known to the parties and the players’ representatives, it is likely that a specific express term was contained in the contract detailing the total transfer fee together with the mechanics of when monetary instalments were due.

If the express clause stated that payment of the first instalment was due on a certain date and was not caveated in any way (such as Mr Sala must have made at least one first team appearance for Cardiff), from a legal perspective, if that date had passed and payment was not received, it is likely that Nantes would be entitled to demand payment of the first instalment.

The question however in most people’s minds is whether or not this is morally correct.  Perhaps timing is a factor here given that this news of Nantes demanding payment broke on 6 February – only days after the plane carrying Mr Sala was located. One could ask, should Nantes have waited for the investigations to conclude – or for the death to be confirmed – before requesting payment from Cardiff?

As in any written contract, a further key point to consider is which jurisdiction and law applies if a dispute arises. In large-value sporting contracts that often span the globe for transfers, this is pivotal to consider.

Given Nantes is based in France and Cardiff in Wales, it could be that either French law or the law of England and Wales, applies depending which Court system and law the parties have agreed to with respect to their dispute. Alternatively, they may have agreed to deal with any dispute through Arbitration which can take place in a number of locations globally and remain in private.

Should Nantes initiate proceedings, the questions to the above may become public.

 

Is “going legal” necessary

Whilst Nantes has allegedly threatened to instruct solicitors if payment is not made, without knowing the specific discussions between the parties, on a matter as sensitive as this, it may be that engaging a legal team to enforce the terms of the contract is not the best route to resolve the matter.

As with all disputes, and where possible, good advice is for parties to try and diffuse the situation and try and deal with matters without instructing solicitors to correspond with the respective party (it may be that legal advice has been sought in the background to allow the party to understand its legal rights). On occasion, engagement of lawyers can polarise the position between contracting parties. That being said, sometimes, on more complex or sinister disputes, lawyers are needed at an early stage. Each matter turns on its own merits.

 

Practical Implications

Before entering into any written contract, a party should seek legal advice as to the specific terms (express or implied) and the risks associated with the same. No party would like to think that when entering into a contract (which is mutually beneficial) that possible litigation may follow in the future. That being said, prevention is better than cure.

It is also important for parties to consider obtaining insurance policies to protect their asset and minimise the risk of an unknown event occurring which could mean legal action is undertaken. That may well be a factor here for Cardiff.

One thing for certain in this matter is that there will be a hotly-contested debate as to whether Nantes, which appears to be preserving its contractual rights in enforcing the contractual term, should, with moral rather than commercial matters in mind, have demanded payment. On the other hand, it is not known if agent fees are due on the transfer and Nantes has been asked to pay third parties involved in the transaction. The reality is, we may never know.

Should you require any advice enforcing contractual terms or assessing litigation risk with your existing contract, football clubs, players or corporate entities/individuals, please contact James Modley at Tenet Compliance & Litigation by contacting us or calling 0121 796 4020.

 

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